by Frank Williford
“I cannot guarantee your social security check will go out on the 3rd.”
He probably can’t guarantee the world will not end before the 3rd either.
He obviously knows a statement about the world ending by the 3rd would just be viewed as a silly statement by him. He expects an uninformed public will view a possible delay in social security payments as a world-ending event.
Does Obama understand the difference between being illiquid and being insolvent, or is he trying once again to frighten people into insisting that he gets what he wants. The country is not insolvent. The Treasury has a brief illiquidity problem if it does nothing. Their illiquidity problem would likely last only a few days at the most. It will not exist at all if Treasury takes appropriate action.
The Treasury should not be allowed to do nothing to avoid temporary illiquidity. For example, instead of mailing out social security funds a few days late the Treasury could elect to pay into the federal employee pension trust fund only a few days late. Obviously none of the politicians want to do this. Such action could later be viewed as precedent setting. Their trust fund is secure. It has not been robbed in the same way Government has robbed social security. Possibly the Lock Box Al Gore talked about so often only applied to Government pensions while we thought he meant social security.
What about the nearly 200 billion dollars in TARP assets the Government is still sitting on. AIG, GM and many other items are readily marketable but the Treasury will have to plan a few days in advance to get their sale done.
Then there is the Federal Reserve’s ability to print money whenever it wishes to so do. It does not have to purchase treasury securities with the money as has been done in the past. It can merely loan the money to Treasury without asking for any security. A “gift” if you will. Hopefully, but not necessarily a temporary gift. A gift would not be counted against the debt ceiling. Such an action could not be prevented if the Administration so chose.
Let’s hope the true facts are known to all of our representatives Republican and Democrat alike. If once again the Government is allowed to successfully engage in duplicity our country will pay a terrible price. The debt ceiling will ultimately be raised but if it is done so without some firm non-revocable spending cuts of true significance then none of our elected representatives and far too many of the Administration’s non-elected appointees will not have upheld their oath of office and they should all be summarily discharged.
I wish I could feel more optimism about the present debt limit talks. If the past is any indicator a convoluted, non-enforceable, possibly even incomprehensible compromise will be reached so that both Republicans and Democrats can claim victory. If this happens our country will have lost a true opportunity to change the way Washington works and we will all ultimately be worse off for it.